Morning Wrap: ASX 200 to edge lower, US markets closed, European stocks fall on Middle East worries

In a nutshell:

• US markets closed in observance of Juneteenth, 'Overnight Summary' table shows yesterday's performance for major US benchmarks and bond yields

• European markets struggled amid potential US involvement in Israel-Iran conflict

• Expect a relatively quiet session, with low liquidity and lacklustre price action

Let's dive in.

S&P 500 SESSION CHART

S&P 500 daily chart (Source: TradingView)

OVERNIGHT MARKETS

• US market closed in observance of Juneteenth, known as America’s second independence day

• European markets fell for a third straight session, closing near worst levels

• Pan-European Stoxx 600 finished 0.8% lower, French CAC 40 slumped 1.3%, Germany’s DAX down 1.1% and UK’s FTSE 100 fell 0.6%

• Weakness largely attributed to concerns about escalating geopolitical tensions in the Middle East, as US officials are reportedly preparing for a potential strike on Iran in the coming days

• Investors worry US military action against Iran could trigger stock selloffs and rising oil prices (RT)

• Foreign holdings of Treasuries held near record high during April turmoil (BBG)

• Global IPOs down 9.3% this year due to US tariffs, market volatility (RT)

STOCKS

• Microsoft ready to walk away from talks with OpenAI (FT)

• Luxury brands introducing more affordable and smaller accessories to generate store traffic and counter slowing demand (BBG)

• Hays shares tumble 9.8% on weak business update, trading at the lowest level since 2008 (BBG)

CENTRAL BANKS

• Fed warns of rising stagflation risk, as Trump's trade war and Middle East conflict weigh on growth, pressure prices (NYT)

• China to maintain its benchmark lending rates unchanged, following recent monetary easing measures (RT)

• Bank of England held rates steady at 4.25%, minutes showed expectations of a “significant slowing over the rest of the year” in pay growth (BBG)

• Switzerland introduces stealth negative rate, meaning lenders will face negative rates if they park too much cash at the central bank (BBG)

• Norway delivers surprise 25 bp rate cut, signals shift to proactive easing (BBG)

• BOJ may delay rate hikes unless US tariff changes improve its gloomy projections (RT)

GEOPOLITICS

• Trump reportedly approved plan to strike Iran, may take place in a matter of days (CNN)

• EU foreign ministers to hold nuclear talks with Iran's foreign minister on Friday (RT)

• Shipping insurance costs have surged in the Middle East (CNBC)

• Strait of Hormuz tanker rates have more than doubled since Israel's attacks k (FT)

• Russia's Dmitriev says Russia, the US, and Saudi Arabia may collaborate to stabilise oil markets amid rising prices (RT)

TARIFFS 

• Trump tells Supreme Court to delay reviewing tariffs, allowing lower courts more time (BBG)

• EU is considering a UK-style trade deal with the US, potentially maintaining some tariffs (FT)

ECONOMY

• UK consumer confidence is at the highest level this year, boosted by Gen Z after latest increase in the minimum wage (BBG)

• Swiss exports to the US collapse 42% in May, narrowest trade surplus in five years, shippers wait for tariff deal (BBG)

• Australian unemployment steady at 4.1% in May, though economy shed 2,500 jobs due to a decline in part-time roles vs. expectations for a 21,200 increase, bolsters case for further RBA easing (BBG)

• New Zealand GDP up 0.8% in the first quarter as recovery begins to take hold (BBG)

ASX TODAY

Be sure to check out our Live Blog for the latest coverage and analysis for company announcements, market movements and economic updates.,

• Symal on track to exceed FY25 pro forma prospectus EBITDA guidance of $102.3m and deliver ~$105m due to higher-than-expected margins, revenue to finish at approximately $900m vs. $961m guidance due to project timing (SYL)

WHAT TO WATCH TODAY

• Quiet session, low liquidity, grind lower: Fridays without US leadership typically deliver quiet trading sessions, with stocks likely hovering near opening levels. Futures signal another soft start, pointing toward a fourth consecutive day of declines. Despite the streak of weakness, the market has only slipped 0.8% in the last six sessions, whereas Europe's Stoxx 600 is down 2.9% over the same time period. While the ASX is holding up relatively well, markets appear to be on the defensive for now.

BROKER MOVES

All the below upgrades and downgrades are from UBS.

• Centuria Capital upgraded to Neutral from Sell; target increased to $1.81 from $1.74

• Centuria Office REIT upgraded to Neutral from Sell; target increased to $1.20 from $1.14

• Charter Hall Retail REIT downgraded to Neutral from Buy; target increased to $3.95 from $3.69

• HomeCo Daily Needs REIT downgraded to Neutral from Buy; target increased to $1.40 from $1.35

• Lendlease Group upgraded to Neutral from Sell; target decreased to $6.05 from $6.38

• Vicinity Centres downgraded to Sell from Neutral; target increased to $2.38 from $2.27

Stocks trading ex-dividend: 

• Fri 20 Jun: None

• Mon 23 Jun: None

• Tue 24 Jun: None

• Wed 25 Jun: None

Other ASX corporate actions today: 

• Dividends paid: Newmont (NEM)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 9:30 am: Japan Inflation (May)

• 11:15 pm: China Loan Prime Rate (Ests: Hold)

• 4:00 pm: UK Retail Sales (May)